The Silk Road Through Afghanistan: The Country's Economic Future Lies in its Region

In December 2009, U.S. President Barack Obama announced a military surge against al Qaeda and Taliban insurgents in Afghanistan. That mission was complemented by a civilian surge to bolster the government, economy, and civil society of Afghanistan and the states throughout its neighborhood. The dual surges laid the foundation for what U.S. Secretary of State Hillary Clinton outlined at an address to the Asia Society last February: an intensified diplomatic effort to support an Afghan-led and Afghan-owned reconciliation process with insurgents. This diplomatic surge is meant to seek an end to the Afghan conflict and chart a new, more secure future for the region.

The United States and its international partners have begun to transfer responsibility for Afghanistan's security to the Afghan National Security Forces, as was agreed last November in Lisbon. As Afghan President Hamid Karzai announced on November 26, nearly half of the population will be under Afghan security responsibility in the near future, and by the end of 2014, security throughout the whole of the country will be the responsibility of the Afghans themselves.

The United States is already shifting its assistance efforts from stabilization projects to investments that focus on spurring growth and integrating Afghanistan into the economy of South and Central Asia.

But there are risks in any such transformation. As World Bank President Robert Zoellick has pointed out, transition in postconflict societies has too often brought unintentional economic hardship. To sustain the many gains that Afghans have achieved over the past decade, and to advance the United States' long-term partnership with the Afghan government, Washington and our allies and partners must focus on the future of Afghanistan's economy.

Afghanistan's political and economic futures are linked. That is why Congress and the U.S. people have provided generous assistance to build Afghan capacity. And we are working closely with the Afghan government to wean the Afghan economy off international assistance and lay the foundation for sustainable, private-sector-led growth. As part of this effort, Afghanistan must be firmly integrated into the economic life of its region. A secure, stable, and prosperous Afghanistan can exist only in the context of a secure, stable, and prosperous neighborhood. That is the premise of what Clinton and others are calling the "new Silk Road."

To create the context in which Afghanistan can grow, the United States is already shifting its assistance efforts from stabilization projects to investments that focus on spurring growth and integrating Afghanistan into the economy of South and Central Asia. Growing employment and genuine economic opportunities in sectors such as agriculture and light manufacturing, facilitated by an improved business climate and greater market access, will blunt the appeal of violent extremism and narcotics trade.

Afghanistan's neighbors stand to benefit from expanded regional linkages -- and many of them have already begun to take steps toward achieving the new Silk Road vision. Last year, Afghanistan and Pakistan agreed to harmonize customs arrangements, institute international standards at crossing points, work to reduce smuggling, and increase government revenues from legitimate trade. In late September, the commerce ministers of India and Pakistan pledged to normalize their countries' bilateral trade relationship -- a milestone, given the more than half century of enmity that exists between these two nations. At the conference on Afghanistan in Istanbul last month, regional governments committed to encourage growth and stability through a series of steps to improve economic and trade confidence. If governments follow through, each country would be better positioned to generate economic growth and opportunity for its people and offer greater market opportunities for both their own people and the people of Afghanistan.

In the longer term, the extractive industries present an appealing source of growth for Afghanistan and private-sector engagement. Based on U.S. Geological Survey maps and data, Afghanistan's mineral resources are worth at least $1 trillion. Some of these deposits are already under development. Last week's announcement by Kabul that Indian and Canadian bidders were the preferred investors to develop a major Afghan iron-ore deposit underscores the real potential of this sector.

To develop these resources for the benefit of all citizens, the Afghan government must take steps to avoid the so-called resource curse (when states blessed with natural resources squander their potential wealth due to corruption and a lack of good governance), while at the same time creating a more transparent, predictable, and appealing business climate to attract international investors. To satisfy both its citizens and the international private sector, Kabul is better defining land rights, legal and regulatory codes, financial and investor protections, and revenue collection procedures. This month, the Afghan government produced a policy document titled "Towards a Self-Sustaining Afghanistan" that presents a forthright, candid approach to reform and a realistic strategy to transition Afghanistan from donor dependency to eventual self-sufficiency.

None of this is possible without the private sector. Afghanistan needs investment and trade if it is going to escape its current over-dependence on foreign assistance. The international community can help by encouraging the private sector to engage with Afghanistan's economy, as the United States has done with the U.S. Agency for International Development, the Overseas Private Investment Corporation, the U.S. Department of Commerce, the U.S. Export-Import Bank, and the U.S. Trade Development Agency.

This is the beginning -- not the end -- of the effort to wind down the war in Afghanistan. Serious challenges remain. As combat troops come home between now and 2014, Washington and our allies and partners must continue to lay the groundwork, including this week in Bonn, for long-term support for Afghanistan's future to ensure that transition is irreversible and that the hard-fought gains of the last ten years are sustained. The countries of the region must choose cooperation over conflict. And Afghans must take responsibility for their future.